37
LONG TERM AGREEMENT
X.X. Xxxxxx Company &
Xxxx Deere Horicon
The intent of this AGREEMENT is to provide long-term price and sourcing
stability between the X.X. Xxxxxx Company (Xxxxxx) & Xxxx Deere Horicon
(Deere). This agreement will provide Xxxxxx with guaranteed requirements and
at the same time provide Deere with price stability. THE TERM OF THIS
AGREEMENT is a (3) three year period commencing 1 August 1997. The following
terms and conditions are agreed upon by both parties:
Deere pricing to remain frozen during the term of this agreement, with the
exception of the following conditions:
Deere specified changes to product design requiring re-pricing. Prices may
decrease or increase depending on the specific changes required.
Changes in the scope of supply. Value added or reductions in the scope of
supply will require a re-pricing. Prices may increase for value added and
decrease for value reduction.
Deere will continue to sole source all hydraulic cylinders ( and some related
components) as shown in the Deere build schedule, from Xxxxxx. This volume
may fluctuate over the term of this agreement, but will always represent all
of the Deere requirements.
Xxxxxx to implement process improvements (see attached project schedule).
On or about 8/1/99 capital improvements implemented since the beginning of
this agreement (8/1/97) will be evaluated for financial impact. The
evaluation date is intended to occur approximately (1) one year after the
project implementation conclusion as outlines in the attached project
schedule. Evaluation includes determination of Net Project Savings resulting
from project implementation. Net Project Savings = Gross Project Savings -
(All Project Costs + Increased Cost Inputs). Project Costs include equipment,
implementation costs, and Brook's required return on investment. Increased
Cost Inputs include increases in labor costs, material costs and other inputs
since 8/1/97. If Net Project Savings is positive, 50% of Net Project Savings
will be shared with Deere solely in the form of a piece part price reduction
commencing 8/1/00, with product volumes based on the then current Deere build
schedule.
Signed:
X.X. Xxxxxx Company_______________________________
Xxxx Deere Horicon_______________________________
